Macro Strategy - The geopolitical risks have intensified since February, particularly following the military conflict involving Iran, which has led to a surge in global financial markets driven by oil and gold prices, indicating strong risk aversion [1][14] - The core risks identified include: 1. The blockage risk of the Strait of Hormuz, which is crucial for global oil transport, with a daily transport volume of approximately 20 million barrels, accounting for about 20% of global oil consumption [1][14] 2. Disruption risks in the chemical supply chain, as Iran is the second-largest methanol producer globally, supplying over 60% of China's methanol imports [1][14] 3. Rising freight and insurance costs due to potential escalation of regional conflicts, which could significantly increase the costs of commodities passing through these routes [1][14] Foreign Exchange Market Impact - Short-term market risk aversion is expected to persist, with funds likely flowing into the US dollar and US Treasury markets, while the Chinese yuan may act as a "safe haven" [1][14] - The dollar index is anticipated to strengthen in the short term but may face pressure in the medium term if the situation escalates, potentially leading to a scenario of rising oil prices and inflation, prompting central banks to raise interest rates [1][14] - The yuan is expected to maintain a stable upward trend, supported by flexible domestic fiscal and monetary policies, with a projected trading range against the dollar of 6.80-6.95 in the short term [1][14] Commodity Market Impact - Short-term risk aversion is driving a synchronous rise in gold and oil prices, while medium-term supply chain disruptions and inflation pressures may reshape the global economic and financial landscape [1][14] - The potential for a prolonged regional conflict could lead to significant changes in global economic dynamics, with high oil prices and shipping costs potentially slowing global economic growth and increasing inflationary pressures [1][14] - Long-term geopolitical tensions are expected to enhance the strategic importance of energy and resources for national economies, with a shift from "efficiency-first" to "security-first" in resource supply [1][14] Stock Market Impact - Initial phases of geopolitical conflict typically pressure global stock markets, with the A-share market likely experiencing some downward pressure due to panic selling [1][14] - However, the impact on the A-share market may be pulse-like and not indicative of a systemic shift, as China's modern manufacturing system can help mitigate external shocks [1][14] - The A-share market is currently supported by domestic policies and trends, with sectors such as gold, oil, and military industries likely benefiting from the ongoing conflict [1][14] Bond Market Impact - Increased risk aversion is expected to drive funds into the bond market, particularly Chinese government bonds, which may attract safe-haven investments [1][14] - The primary drivers of the Chinese bond market will remain domestic fiscal and monetary policies, with expectations of continued liquidity support from the central bank [1][14]

Core Viewpoint - Hong Kong is considering expanding the scope of confidential IPO applications to allow a wider range of companies to submit IPO applications, aiming to enhance the competitiveness of its listing market [1] Group 1: Regulatory Collaboration - The Hong Kong Stock Exchange (HKEX) is working closely with the Hong Kong Securities and Futures Commission (SFC) to improve the exchange's competitiveness and will announce relevant progress to the market in due course [1] - The SFC has also stated its commitment to collaborate with HKEX to explore further measures to enhance the competitiveness of Hong Kong's listing market, ensuring it remains a preferred destination for quality companies [1] Group 2: Market Infrastructure and Listing Mechanisms - HKEX is dedicated to optimizing market infrastructure and listing mechanisms to keep pace with developments, having introduced several significant reforms in recent years [1] - Key reforms include the introduction of rules in 2018 allowing dual-class share structures for listings, permitting biotech companies without revenue to go public, and the launch of a specialized listing mechanism for technology companies in 2023 [1]

Group 1 - The Financial Secretary of Hong Kong, Paul Chan, expresses cautious optimism for the market in the Year of the Horse, highlighting that three out of the last four Horse years experienced significant market gains [2][3] - There are currently 488 companies queued for IPO applications at the Hong Kong Stock Exchange, indicating a vibrant market environment [7] - The Hong Kong Stock Exchange aims to diversify its offerings in fixed income, currency, and commodities to meet international investors' needs and contribute to the internationalization of the Renminbi [11][12] Group 2 - The Hong Kong government emphasizes the importance of maintaining an open and fair market environment to attract international investors, despite ongoing global uncertainties [5][6] - The exchange has completed 24 IPOs in 2026, raising over 87 billion HKD, with a daily trading volume that has recently exceeded 3,000 billion HKD [9] - The Hong Kong Stock Exchange plans to enhance its listing system and implement a T+1 settlement cycle, aiming to improve market competitiveness and efficiency [9][11] Group 3 - The exchange's CEO, Nicolas Aguzin, notes the increasing interest from international investors in diversifying their portfolios across various asset classes, including bonds and commodities [11][12] - The Hong Kong market is positioned to play a crucial role in connecting global investors with opportunities in mainland China, supported by the national "14th Five-Year Plan" [6][12] - The exchange is committed to developing a comprehensive ecosystem for fixed income, currency, and commodity markets, aiming for significant growth opportunities in the future [11][12]

Core Insights - The Hong Kong financial market demonstrated significant activity in 2025, setting multiple trading records in both the primary and secondary markets, reinforcing its status as a leading international financial center in Asia [1] Group 1: Market Performance - The average daily turnover in the cash market reached a record high of HKD 249.8 billion, representing a year-on-year increase of 89.5% [2] - Hong Kong regained its position as the world's top IPO market in 2025, with 119 new listings raising a total of HKD 285.8 billion, including three companies that ranked among the top ten global IPOs of the year [4] - The derivatives market also saw a record average daily trading volume of 1.66 million contracts, an increase of 7% year-on-year [5] Group 2: Product Innovations and Growth - Stock options became one of the most actively traded products, with an average daily trading volume rising by 22% to 879,831 contracts [8] - The offshore RMB deposits and cross-border settlement volumes increased, leading to a rise in RMB currency futures trading, with an average daily volume of 103,626 contracts, up 8.7% from 2024 [9] - The average daily turnover for ETFs reached HKD 33 billion, a 108% increase from 2024, with several innovative products launched [10] Group 3: Trading Infrastructure and Services - The Central Clearing System processed an average of 3.8 million transactions daily, a 67% increase from 2024, reflecting the market's resilience and the effectiveness of infrastructure investments [14] - The trading volume for structured products like bull-bear certificates and warrants was robust, with bull-bear certificates achieving an average daily turnover of HKD 10.5 billion, up 59% year-on-year [12]

Core Viewpoint - The Hong Kong capital market has shown strong momentum since 2026, with a significant increase in IPO applications, raising concerns about the market's capacity to absorb this influx [1][5]. Group 1: IPO Market Performance - The number of IPO applications in Hong Kong surged from over 300 at the end of 2025 to 414 by the end of January 2026, indicating a rapid growth of nearly 100 applications in just one month [1]. - Hong Kong Exchanges and Clearing Limited (HKEX) regained the top position globally in IPO financing in 2025, with a daily trading volume that doubled to approximately 250 billion HKD, and the average daily trading volume for 2026 has reached 278 billion HKD [3]. - The market has received over 400 IPO applications, including 11 from international companies outside mainland China, showcasing global interest in entering the Chinese market through Hong Kong [3]. Group 2: Quality of IPOs - The quality of IPOs is emphasized as a key factor for attracting global investors, with the HKEX and the Hong Kong Securities and Futures Commission (SFC) focusing on the quality of sponsor submissions rather than the qualifications of the applicants themselves [3][5]. - HKEX has committed to a 40-working-day timeline for IPO approvals, contingent on the quality of submitted materials, which is aimed at ensuring high-quality listings [3]. Group 3: Market Capacity and Demand - HKEX's CEO expressed confidence that the market can absorb the influx of IPOs, attributing this to strong demand from international capital seeking diversified investment opportunities [5]. - The CEO highlighted that as long as the IPOs are of high quality, foreign capital will continue to flow into the market, negating concerns about a "backlog" of IPOs [5]. Group 4: Global Investor Interest - Since 2025, there has been a noticeable return of foreign capital to the Hong Kong market, driven by a desire for diversified asset allocation amid rising geopolitical uncertainties [7]. - The CEO noted that the Hong Kong market is providing attractive investment opportunities, which has been confirmed by international interest observed at events like the World Economic Forum in Davos [7]. Group 5: Future Market Development - HKEX plans to enhance its fixed income market as a core strategic focus for 2026, aiming to provide a broader range of investment options beyond equities [8]. - The exchange has invested in the Central Moneymarkets Unit (CMU) to build a foundation for the fixed income market and intends to collaborate with regulatory bodies and partners to develop a comprehensive market ecosystem [8].

Group 1 - The CEO of Hong Kong Stock Exchange, Charles Li, stated that there are currently over 400 companies waiting to go public, indicating strong demand for IPOs and a rising willingness among global investors for diversified allocations, alleviating concerns about a "bottleneck" in listings [1] - The Hong Kong IPO market is recognized by international investors, with a strong recovery expected in 2025, projected to raise HKD 285.8 billion, regaining the top position globally [1] - As of January 30, 2026, there have been 459 applications for listings on the main board, with 409 applications currently under review, and 11 IPOs completed in the first three weeks of the year, raising approximately USD 4 billion [1] Group 2 - Since 2025, the number of listing applications in Hong Kong has surged, leading to concerns about the quality of application materials, prompting the Hong Kong Securities and Futures Commission to require 13 sponsors to submit internal review reports within three months and to suspend 16 listing applications [2] - The CEO welcomed the regulatory focus on the quality of materials submitted by sponsors rather than the quality of the listing applicants, emphasizing that the quality of listed companies has always been a key factor in attracting global investors to Hong Kong [2] - Under the current listing process, the Hong Kong Stock Exchange must confirm within 40 working days whether there are significant regulatory concerns, provided that the listing application materials meet the required standards [2]

Group 1 - The CEO of Hong Kong Stock Exchange (HKEX), Charles Li, stated that there are currently over 400 companies waiting to go public, indicating strong demand for IPOs and a growing interest from global investors in diversifying their investments, thus alleviating concerns about a "backlog" in listings [1] - HKEX is expected to see a strong recovery in the IPO market by 2025, with an anticipated total of HKD 285.8 billion in IPO financing, regaining the top position globally [1] - As of January 30, 2026, there have been 459 applications for listings on the main board of HKEX, with 409 applications currently being processed, and 11 IPOs completed in the first three weeks of 2026, raising approximately USD 4 billion [2] Group 2 - International investors, including long-term funds and sovereign wealth funds, are actively seeking to invest in markets outside the U.S., with many expressing interest in the Hong Kong IPO market and requesting more diversified products beyond equities [2] - A report from Goldman Sachs indicated that about two-thirds of investors participating in Hong Kong IPOs are from foreign sources, with retirement and sovereign funds increasing their subscription rates [2] - The Hong Kong Securities and Futures Commission (SFC) has raised concerns about the quality of listing application materials due to the surge in applications, leading to a directive for sponsors to conduct internal reviews and the suspension of 16 listing applications [2][4]

Summary of Key Points Core Viewpoint The Hong Kong Stock Exchange (HKEX) has seen a significant number of initial public offerings (IPOs) in progress, with a total of 415 cases being processed as of January 30, 2026. This indicates a robust IPO market, with a notable number of new applications and approvals. Group 1: IPO Application Status - As of January 30, 2026, there are 474 IPO applications in total, comprising 459 from the Main Board, 7 from GEM, and 8 from other investment tools [2]. - Among the applications, 371 were existing applications and resubmissions that were not processed by December 31, 2025, while 103 new applications were accepted in 2026 [2][5]. - The number of applications currently being processed stands at 415, with 408 from the Main Board, 6 from GEM, and 1 from other investment tools [3]. Group 2: Approved IPOs - There are 27 IPOs that have received approval from the listing committee and are awaiting listing, with 26 of these on the Main Board [4]. - A total of 19 IPOs have already been listed, including 12 from the Main Board, 1 from GEM, and 6 from other investment tools [2]. Group 3: New Applications - In 2026, 103 new applications have been accepted, with 95 from the Main Board and 2 from GEM [5]. - The applications include various companies, such as YESMRO Holdings Limited and Shanghai Xinyi Lintian Technology Co., Ltd., which submitted their applications on January 30, 2026 [5][6].

- The report focuses on the analysis of the industries where Northbound funds have increased their holdings, particularly highlighting sectors such as power and new energy equipment, electronics, and metal materials and mining[1][5][13] - Northbound funds' total holdings in A-shares amounted to approximately 2.59 trillion yuan as of December 31, 2025, representing an increase of about 46 billion yuan compared to September 30, 2025[1][5][13] - Relative to the CSI 300 Index, Northbound funds were significantly overweight in the power and new energy equipment sector, with an allocation ratio of approximately 18.0%, compared to 8.6% in the CSI 300 Index, resulting in an overweight of about 9.5%[5][15] - The top five primary industries with the highest net inflows of Northbound funds in Q4 2025 were metal materials and mining, electronics, power and new energy equipment, telecommunications, and insurance[6][20] - The top five secondary industries with the highest net inflows of Northbound funds in Q4 2025 were new energy vehicle equipment, basic non-ferrous metals, communication equipment, precious metals, and components and devices[6][25]

Group 1 - The Hong Kong Stock Exchange (HKEX) announced the launch of six new stock option categories on January 19, aimed at expanding the stock options market and providing investors with more choices [1] - The average daily trading volume in the HKEX derivatives market reached 1,662,751 contracts last year, marking a 7% year-on-year increase and setting a new record [1] - Stock options, including monthly and weekly expiry contracts, were among the most actively traded products, with an average daily trading volume of 879,831 contracts last year, which is a 22% year-on-year increase and also a record high [1] Group 2 - The new stock options include contracts for companies such as Anjin Huangjin Guo Yi Limited (2259), Wuxi Zhenming Kangde New Town Development Co., Ltd. (2359), and others, with varying contract sizes and expiry months [2] - Specific contract sizes for the new options range from 100 shares to 3,000 shares, catering to different investor needs [2] - The introduction of these new options is expected to enhance liquidity and trading opportunities in the stock options market [2]